BitCoin could become the go-to currency for digital tipping

Published by on February 19, 2014|Comments Off on BitCoin could become the go-to currency for digital tipping

A lot of the hype around Bitcoin involves the crazy, illegal, or mundane things you can buy with it. But the digital currency could come in handy for an old-fashioned practice: tipping.

According to an informal survey of 1,000 Bitcoin users published last April, users ranked gifts and donations as their most frequent transactions. At 36%, these categories beat out illegal drugs, gambling and the catch-all “other legal goods.” Of course, there’s no way to verify these results, but there’s plenty of anecdotal evidence. A growing number of charities are accepting Bitcoin donations, and other cryptocurrencies have contributed to high-profile fundraising. For example, last month Reddit’s Dogecoin community raised $33,000 dollars worth of the digital currency for the Jamaican bobsled team’s Olympic campaign.

But another theory, floated yesterday on the Bitcoin blog CoinDesk, is that cryptocurrencies are becoming the web’s standard for the so-called gift economy. The best example of the gift economy, writes Brett Scott, the post’s author, is to imagine a sidewalk busker: “The busker does not expect anything back from any particular person who walks past, but the fact that they leave a hat out for tips shows that they hope that in general some people will be inspired to give back to them.”

On the web, this could benefit bloggers, artists, and software developers who put their work out for free, but ask that people who enjoy their work click the donate button and leave a digital tip.

Scott argues that traditional web transaction services are too cumbersome for small, impromptu donations—otherwise known as tips. It’s not hard to imagine how filling out a credit card form might seem like more trouble than the tip is worth. PayPal, by far the most common way to donate, takes a bite out of every dollar a digital busker receives. With both services, writes Scott, the formality kills the spontaneous feelings that inspire tipping.

His theory doesn’t mention new micro-exchange services like tinyGive and Venmo. But, both of those services still charge fees and go through traditional bank accounts. Cryptocurrencies such as Bitcoin are web-native, so they operate more like cash.

To new users, figuring out a Bitcoin transaction is more trouble than its worth for these humble shows of appreciation. But for established Bitcoin fans, it might be the closest thing the web can offer to the feeling of tossing a few coins to the guy playing bucket drums on the train platform.